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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For Quarter Ended: March 31, 1999
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Commission File Number: 0-19345
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ESB FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-1659846
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 Lawrence Avenue, Ellwood City, PA 16117
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(Address of principal executive offices) (Zip Code)
(724) 758-5584
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. X Yes No
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Number of shares of common stock outstanding as of April 30, 1999:
Common Stock, $0.01 par value 5,225,564 shares
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(Class) (Outstanding)
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ESB FINANCIAL CORPORATION
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
------------------------------
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C> <C>
Consolidated Statements of Financial Condition
as of March 31, 1999 (Unaudited) and December 31, 1998.... 1
Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998 (Unaudited).......... 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1999 and 1998 (Unaudited).......... 3
Notes to Consolidated Financial Statements................ 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.......... 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 15
<CAPTION>
PART II - OTHER INFORMATION
---------------------------
<S> <C> <C>
Item 1. Legal Proceedings......................................... 16
Item 2. Changes in Securities..................................... 16
Item 3. Defaults Upon Senior Securities........................... 16
Item 4. Submission of Matters to a Vote of Security Holders....... 16
Item 5. Other Information......................................... 16
Item 6. Exhibits and Reports on Form 8-K.......................... 16
Signatures................................................ 17
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
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ESB Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition
As of March 31, 1999 (Unaudited) and December 31, 1998
(Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
(Unaudited)
------------- -------------
<S> <C> <C>
Assets
------
Cash on hand and in banks $ 2,591 $ 3,140
Interest-earning deposits 5,313 6,534
Federal funds sold 2,470 629
Securities available for sale; cost of $492,586 and $480,537 495,955 481,234
Securities held to maturity; market value of $58,353 and $64,033 58,278 63,815
Loans receivable, net 359,891 360,280
Accrued interest receivable 6,409 6,792
Federal Home Loan Bank (FHLB) stock 18,435 18,435
Premises and equipment, net 6,557 6,193
Real estate acquired through foreclosure, net 13 21
Prepaid expenses and other assets 9,847 10,359
Bank owned life insurance 15,183 15,006
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Total assets $ 980,942 $ 972,438
============= =============
Liabilities and Stockholders' equity
------------------------------------
Liabilities:
Deposits $ 423,016 $ 423,051
Borrowed funds 461,786 456,355
Guaranteed preferred beneficial interest in subordinated debt, net 24,038 24,027
Advance payments by borrowers for taxes and insurance 3,326 3,171
Accrued expenses and other liabilities 5,450 4,751
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Total liabilities 917,616 911,355
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Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
none issued - -
Common stock, $.01 par value, 10,000,000 shares authorized;
6,337,755 and 6,337,755 shares issued;
5,251,472 and 5,265,886 shares outstanding 63 63
Additional paid-in capital 59,490 59,448
Treasury stock, at cost; 1,086,283 and 1,071,869 shares (17,062) (16,841)
Unearned Employee Stock Ownership Plan (ESOP) shares (2,604) (2,681)
Unvested shares held by Management Recognition Plan (MRP) (237) (237)
Retained earnings, substantially restricted 21,452 20,870
Accumulated other comprehensive income, net 2,224 461
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Total stockholders' equity 63,326 61,083
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Total liabilities and stockholders' equity $ 980,942 $ 972,438
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
ESB Financial Corporation and Subsidiaries
Consolidated Statements of Operations
For the three months ended March 31, 1999 and 1998 (Unaudited)
(Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
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<S> <C> <C>
Interest income:
Loans receivable $ 6,955 $ 6,816
Securities available for sale 7,272 7,232
Securities held to maturity 846 1,346
FHLB stock 296 289
Deposits with banks and federal funds sold 62 69
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Total interest income 15,431 15,752
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Interest expense:
Deposits 4,397 4,288
Borrowed funds 6,662 6,518
Guaranteed preferred beneficial interest in subordinated debt 557 556
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Total interest expense 11,616 11,362
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Net interest income 3,815 4,390
Provision for loan losses 3 -
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Net interest income after provision for loan losses 3,812 4,390
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Noninterest income:
Fees and service charges 330 315
Net realized gain (loss) on sales of securities available for sale 215 (7)
Other 192 10
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Total noninterest income 737 318
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Noninterest expense:
Compensation and employee benefits 1,620 1,481
Premises and equipment 363 257
Federal deposit insurance premiums 69 62
Data processing 112 128
Other 808 725
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Total noninterest expense 2,972 2,653
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Net income before provision for income taxes 1,577 2,055
Provision for income taxes 222 505
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Net income $ 1,355 $ 1,550
======= =======
Net income per share:
Basic $0.27 $0.28
Diluted $0.26 $0.27
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
ESB Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the three months ended March 31, 1999 and 1998 (Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
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<S> <C> <C>
Operating activities:
Net income $ 1,355 $ 1,550
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization for premises and equipment 140 86
Provision for losses 7 14
Amortization of premiums and accretion of discounts 558 440
Origination of loans available for sale (5,585) (2,447)
Proceeds from sale of loans available for sale 4,918 1,521
(Gain) loss on sale of securities available for sale (215) 7
Amortization of intangible assets 150 150
Decrease (increase) in accrued interest receivable 383 (472)
(Increase) decrease in prepaid expenses and other assets (546) 349
Increase in accrued expenses and other liabilities 699 1,973
Other 6 238
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Net cash provided by operating activities 1,870 3,409
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Investing activities:
Loan originations and purchases (28,296) (32,322)
Purchases of securities available for sale (64,754) (83,808)
Purchases of securities held to maturity - (993)
Purchases of FHLB stock - (462)
Additions to premises and equipment (504) (63)
Principal repayments of loans receivable 29,299 23,636
Principal repayments of securities available for sale 30,929 26,216
Principal repayments of securities held to maturity 5,443 4,234
Proceeds from the sale of securities available for sale 21,611 19,459
Proceeds from sale of REO 15 -
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Net cash used in investing activities (6,257) (44,103)
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Financing activities:
Net (decrease) increase in deposits (35) 2,019
Net increase in borrowed funds 5,431 31,159
Proceeds received from exercise of stock options 105 226
Dividends paid (474) (474)
Payments to acquire treasury stock (646) (1,426)
Stock purchased by ESOP (39) (449)
Principal repayment of ESOP loan 116 108
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Net cash provided by financing activities 4,458 31,163
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Net increase (decrease) in cash equivalents 71 (9,531)
Cash equivalents at beginning of period 10,303 18,947
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Cash equivalents at end of period $ 10,374 $ 9,416
=========== ==========
</TABLE>
Continued.
3
<PAGE>
ESB Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows, (Continued)
For the three months ended March 31, 1999 and 1998 (Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1999 1998
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<S> <C> <C>
Supplemental information:
Interest paid $ 11,593 $ 12,118
Income taxes paid 90 45
Non-cash transactions:
Transfers from loans receivable to real estate acquired
through foreclosure - 48
Dividends declared but not paid 473 471
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
ESB Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Presentation
ESB Financial Corporation (the "Company") is a thrift holding company. The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary savings bank, ESB Bank, F.S.B. ("ESB" or "the
Bank"), and its other subsidiaries, PennFirst Financial Services, Inc.,
PennFirst Capital Trust I, THF, Inc. and AMSCO, Inc.
The accompanying unaudited consolidated financial statements for the
interim periods include all adjustments, consisting only of normal
recurring accruals, which are necessary, in the opinion of management, to
fairly reflect the Company's financial position and results of operations.
Additionally, these consolidated financial statements for the interim
periods have been prepared in accordance with instructions for the
Securities and Exchange Commission's Form 10-Q and therefore do not include
all information or footnotes necessary for a complete presentation of
financial condition, results of operations and cash flows in conformity
with generally accepted accounting principles. For further information,
refer to the audited consolidated financial statements and footnotes
thereto for the year ended December 31, 1998, as contained in the 1998
Annual Report to Stockholders.
The results of operations for the three month period ended March 31, 1999
are not necessarily indicative of the results that may be expected for the
entire year. Certain amounts previously reported have been reclassified to
conform with the current year's reporting format.
2. Securities
The Company's securities available for sale and held to maturity portfolios
are summarized as follows:
<TABLE>
<CAPTION>
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(In thousands) Amortized Unrealized Unrealized Fair
cost gains losses value
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<S> <C> <C> <C> <C>
Available for sale:
- ------------------
As of March 31, 1999:
Trust Preferred securities $ 3,274 $ 9 $ (29) $ 3,254
Municipal securities 96,671 2,254 (239) 98,686
Equity securities 2,271 286 (126) 2,431
Corporate Bonds 52,653 27 (724) 51,956
Mortgage-backed securities 337,717 2,365 (454) 339,628
------------ ----------- ------------ ------------
$ 492,586 $ 4,941 $ (1,572) $ 495,955
============ =========== ============ ============
As of December 31, 1998:
Trust Preferred securities $ 3,275 $ 54 $ (29) $ 3,300
Municipal securities 99,035 2,258 (195) 101,098
Equity securities 2,101 348 (157) 2,292
Corporate Bonds 52,649 - (2,329) 50,320
Mortgage-backed securities 323,477 1,637 (890) 324,224
------------ ----------- ------------ ------------
$ 480,537 $ 4,297 $ (3,600) $ 481,234
============ =========== ============ ============
Held to maturity:
- ----------------
As of March 31, 1999:
U.S. Government securities $ 3,989 $ 36 $ - $ 4,025
Municipal securities 7,995 196 - 8,191
Mortgage-backed securities 46,294 42 (199) 46,137
------------ ----------- ------------ ------------
$ 58,278 $ 274 $ (199) $ 58,353
============ =========== ============ ============
As of December 31, 1998:
U.S. Government securities $ 4,986 $ 41 $ - $ 5,027
Municipal securities 7,994 210 - 8,204
Mortgage-backed securities 50,835 105 (138) 50,802
------------ ----------- ------------ ------------
$ 63,815 $ 356 $ (138) $ 64,033
============ =========== ============ ============
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</TABLE>
5
<PAGE>
3. Loans Receivable
The Company's loans receivable as of the respective dates are summarized
as follows:
<TABLE>
<CAPTION>
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March 31, December 31,
(In thousands) 1999 1998
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<S> <C> <C>
Mortgage loans:
Residential - single family $ 229,406 $ 225,054
Residential - multi family 11,644 11,206
Commercial real estate 31,672 32,300
Construction 33,275 41,215
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305,997 309,775
Other loans:
Consumer loans 55,739 56,897
Commercial business 13,623 14,216
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375,359 380,888
Less:
Allowance for loan losses 4,820 4,815
Deferred loan fees and net discounts 741 785
Loans in process 9,907 15,008
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$ 359,891 $ 360,280
============= =============
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</TABLE>
4. Deposits
The Company's deposits as of the respective dates are summarized as
follows:
<TABLE>
<CAPTION>
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(Dollar amounts in thousands) March 31, 1999 December 31, 1998
---------------------------------------- ---------------------------------------
Weighted Weighted
average average
Type of accounts rate Amount % rate Amount %
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<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits - $ 7,825 1.9% - $ 6,002 1.4%
Interest-bearing demand deposits 2.38% 160,415 37.9% 2.34% 156,994 37.1%
Time deposits 5.38% 254,776 60.2% 5.54% 260,055 61.5%
------------ ------------ ----------- -----------
4.22% $ 423,016 100.0% 4.27% $ 423,051 100.0%
============ ============ =========== ===========
Time deposits mature as follows:
Within one year $ 153,704 36.3% $ 145,231 34.3%
After one year through two years 66,330 15.7% 72,845 17.2%
After two years through three years 10,452 2.5% 18,438 4.4%
Thereafter 24,290 5.7% 23,541 5.6%
------------ ------------ ----------- -----------
$ 254,776 60.2% $ 260,055 61.5%
============ ============ =========== ===========
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</TABLE>
6
<PAGE>
5. Borrowed Funds
The Company's borrowed funds as of the respective dates are summarized as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands) March 31, 1999 December 31, 1998
----------------------- ------------------------
Weighted Weighted
average rate Amount average rate Amount
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FHLB advances:
Due within 12 months 6.12% $ 73,095 5.99% $ 98,595
Due beyond 12 months but within 5 years 6.11% 205,539 6.04% 206,660
Due beyond 5 years but within 10 years 5.33% 45,440 7.79% 440
Due beyond 10 years 6.03% 269 6.01% 270
------------ ------------
324,343 305,965
Reverse repurchase agreements:
Due within 90 days 5.53% $ 10,000 5.29% $ 44,860
Due beyond 90 days but within 5 years 5.54% 127,390 5.59% 105,500
------------ ------------
137,390 150,360
Treasury tax and loan note payable 53 30
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$ 461,786 $ 456,355
============ ============
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
6. Net Income Per Share
Net income per share is calculated by dividing net operating results for
the period by the weighted average number of shares of common shares and
equivalents outstanding during the period. Net income per share and
weighted average shares and equivalents outstanding for all periods
reported reflect the stock dividend declared on April 17, 1998. For
purposes of computing basic net income per share for the three month
periods ended March 31, 1999 and 1998, the weighted average shares
outstanding were 5,034,000 and 5,542,000, respectively. For purposes of
computing diluted net income per share for the three month periods ended
March 31, 1999 and 1998, the weighted average shares and equivalents
outstanding were 5,191,000 and 5,802,000, respectively. For all periods,
the difference between average basic and average diluted shares represented
the dilutive impact of stock options.
Options to purchase 63,735 shares of common stock at $18.00 per share were
outstanding as of March 31, 1999 but were not included in the computation
of diluted earnings per share because the options' exercise price was
greater than the average market price of common shares. The options expire
on June 30, 2008.
7. Comprehensive Income
Comprehensive income is defined as "the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners". Only the impact of unrealized gains or losses on
securities available for sale is necessary and applicable to be disclosed
as an additional component of the Company's total comprehensive income
under the requirements of Statement of Financial Accounting Standards No.
130.
For the three months ended March 31, 1999 and 1998, total comprehensive
income was $3.1 million and $1.6 million, respectively, including other
comprehensive income which represented an increase of $1.7 million and a
decrease of $76,000, respectively, in unrealized gains/losses on securities
available for sale, net of income taxes.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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CHANGES IN FINANCIAL CONDITION
General. The Company's total assets increased by $8.5 million or 0.9% to $980.9
million at March 31, 1999 from $972.4 million at December 31, 1998. This net
increase was primarily the result of increases in securities, cash and cash
equivalents, premises and equipment, and bank owned life insurance of $9.2
million, $71,000, $364,000 and $177,000, respectively, partially offset by
decreases in loans receivable, accrued interest receivable, real estate acquired
through foreclosure and prepaid expenses and other assets of $389,000, $383,000,
$8,000 and $512,000, respectively. The increase in total assets reflects a
corresponding increase in total liabilities and stockholders' equity of $6.3
million or 0.7% and $2.2 million or 3.7%, respectively. The increase in total
liabilities was primarily the result of increases in borrowed funds, advance
payments by borrowers for taxes and insurance, and accrued expenses and other
liabilities of $5.4 million, $155,000 and $699,000, respectively. The increase
in stockholders' equity was the result of increases in additional paid in
capital, retained earnings and accumulated other comprehensive income of
$42,000, $582,000 and $1.8 million, respectively, and a decrease in unearned
employee stock ownership plan ("ESOP") shares of $77,000, offset by an increase
in treasury stock of $221,000.
Cash on hand, Interest-earning deposits and Federal funds sold. Cash on hand,
interest-earning deposits and federal funds sold represent cash equivalents.
Cash equivalents increased a combined $71,000 or 0.7% to $10.4 million at March
31, 1999 from $10.3 million at December 31, 1998. These accounts are typically
increased by deposits from customers into savings and checking accounts, loan
and security repayments and proceeds from borrowed funds. Decreases result from
customer withdrawals, new loan originations, security purchases and repayments
of borrowed funds. The net increase between March 31, 1999 and December 31,
1998 can be attributed primarily to increases in money market investments.
Securities. The Company's securities portfolios increased by $9.2 million or
1.7% to $554.2 million at March 31, 1999 from $545.0 million at December 31,
1998. This net increase was primarily the result of purchases of available for
sale securities of $64.8 million, consisting of purchases of mortgage-backed
securities of $64.4 million and common stock of banks and thrifts of $401,000,
during the three months ended March 31, 1999. Partially offsetting the
purchases of securities were sales of available for sale securities of $21.6
million, consisting of sales of municipal securities of $2.5 million, equity
securities of $316,000 and mortgage-backed securities of $18.8 million, and
repayments and maturities of securities of $36.4 million, during the three
months ended March 31, 1999.
Loans receivable. Net loans receivable decreased $389,000 or 0.1% to $359.9
million at March 31, 1999 from $360.3 million at December 31, 1998 due to
refinancing and repayments. Included in this decrease were decreases in
mortgage loans of $3.8 million or 1.2% and other loans of $1.8 million or 2.5%,
partially offset by a decrease in loans in process and deferred loan fees of
$5.1 million or 32.6%, during the three months ended March 31, 1999.
Non-performing assets. Non-performing assets include non-accrual loans and real
estate acquired through foreclosure. Non-performing assets amounted to $4.1
million or 0.44% and $4.1 million or 0.45% of total assets at March 31, 1999 and
December 31, 1998, respectively.
Deposits. Total deposits decreased $35,000 to $423.0 million at March 31, 1999
from $423.1 million at December 31, 1998. This decrease was primarily the
result of a decrease of $5.3 million in time deposits offset by increases of
$1.8 million and $3.4 million in noninterest-bearing deposits and interest-
bearing demand deposit accounts during the three months ended March 31, 1999.
8
<PAGE>
Borrowed funds. Borrowed funds increased $5.4 million or 1.2% to $461.8 million
at March 31, 1999 from $456.4 million at December 31, 1998. This increase is
primarily the result of the Company utilizing FHLB advances to fund the increase
in securities. FHLB advances increased $18.4 million or 6.0% while reverse
repurchase agreement borrowings decreased $13.0 million or 8.6% during the three
months ended March 31, 1999.
Stockholders' equity. Stockholders' equity increased $2.2 million to $63.3
million at March 31, 1999 from $61.1 million at December 31, 1998. This
increase was principally the result of increases in additional paid in capital,
retained earnings and accumulated other comprehensive income of $42,000,
$582,000 and $1.8 million, respectively, with a decrease in unearned ESOP shares
of $77,000, offset by an increase in treasury stock of $221,000 during the three
months ended March 31, 1999.
RESULTS OF OPERATIONS
General. The Company recorded net income of $1.4 million for the three months
ended March 31, 1999, as compared to net income of $1.6 million for the same
period in the prior year. The $195,000 or 12.6% decrease in net income for the
three months ended March 31, 1999, as compared to the three months ended March
31, 1998, was primarily attributable to a decrease in net interest income of
$575,000 and an increase in the provision for loan losses and noninterest
expense of $3,000 and $319,000, respectively, partially offset by an increase in
noninterest income of $419,000 and a decrease in the provision for income taxes
of $283,000.
Net interest income. Net interest income decreased $575,000 or 13.1% to $3.8
million for the three months ended March 31, 1999, compared to $4.4 million for
the same period in the prior year. This decrease in net interest income can be
attributed to a decrease in interest income of $321,000 and an increase in
interest expense of $254,000.
Interest income. Interest income decreased $321,000 or 2.0% to $15.4 million
for the three months ended March 31, 1999, compared to $15.8 million for the
same period in the prior year. This decrease can be attributed primarily to a
decrease in interest earned on securities and interest-earning deposits of
$460,000 and $7,000, respectively, partially offset by increases in interest
earned on loans receivable and FHLB stock of $139,000 and $7,000, respectively.
Interest earned on loans receivable increased $139,000 or 2.0% to $7.0 million
for the quarter ended March 31, 1999, compared to $6.8 million for the same
period in the prior year. This increase was primarily attributable to an
increase in the average balance of loans outstanding of $16.8 million or 4.8% to
$363.2 million for the three months ended March 31, 1999, compared to $346.4
million for the same period in the prior year, partially offset by a decrease in
the yield of loans receivable to 7.66% for the three months ended March 31,
1999, compared to 7.87% for the same period in the prior year.
Interest earned on securities decreased $460,000 or 5.4% to $8.1 million for the
three months ended March 31, 1999, compared to $8.6 million for the same period
in the prior year. This decrease was primarily attributable to a decline in the
tax equivalent yield on securities to 6.47% for the three months ended March 31,
1999, compared to 6.83% for the same period in the prior year. Partially
offsetting this yield decrease was an increase in the average balance of
securities held of $13.9 million or 2.6% to $547.4 million for the three months
ended March 31, 1999, compared to $533.5 million for the same period in the
prior year. The increase in the average balance of securities between periods
was primarily the result of net security purchases during the last three
quarters of 1998 and the first quarter of 1999.
Interest expense. Interest expense increased $254,000 or 2.2% to $11.6 million
for the three months ended March 31, 1999, compared to $11.4 million for the
same period in the prior year. This increase in interest expense can be
primarily attributed to increases in interest incurred on deposits and borrowed
funds of $109,000 and $144,000, respectively.
9
<PAGE>
Interest incurred on deposits increased $109,000 or 2.5% to $4.4 million for the
three months ended March 31, 1999, compared to $4.3 million for the same period
in the prior year. This increase was primarily attributable to an increase in
the average balance of interest-bearing deposits of $22.5 million or 5.7% to
$417.1 million for the three months ended March 31, 1999, compared to $394.6
million for the same period in the prior year. The cost of interest-bearing
deposits decreased to 4.28% for the quarter ended March 31, 1999 compared to
4.41% for the same period in the prior year.
Interest incurred on borrowed funds increased $144,000 or 2.2% to $6.7 million
for the three months ended March 31, 1999, compared to $6.5 million for the same
period in the prior year. This increase was primarily attributable to an
increase in the average balance of borrowed funds of $31.7 million or 7.5% to
$453.9 million for the three months ended March 31, 1999, compared to $422.2
million for the same period in the prior year. This increase in borrowed funds
is a reflection of the increase in securities, as such funds were utilized to
provide for security growth. Partially offsetting the increase in interest
incurred on borrowed funds was a decrease in the cost of these funds to 5.95%
for the three months ended March 31, 1999, compared to 6.26% for the same period
in the prior year.
Provision for loan losses. The provision for loan losses was $3,000 at March
31, 1999. This reflects the adequacy of the Company's allowance for loan losses
as of March 31, 1999. In determining the appropriate level of allowance for
loan losses, management considers historical loss experience, the financial
condition of borrowers, economic conditions (particularly as they relate to
markets where the Company originates loans), the status of non-performing
assets, the estimated underlying value of the collateral and other factors
related to the collectability of the loan portfolio. The Company's total
allowance for losses on loans at March 31, 1999 and at December 31, 1998
amounted to $4.8 million or 1.32% of the Company's total loan portfolio. The
Company's allowance for losses on loans as a percentage of non-performing loans
was 102.3% and 103.4% at March 31, 1999 and December 31, 1998, respectively.
Noninterest income. Noninterest income increased $419,000 or 131.8% to $737,000
for the three months ended March 31, 1999, compared to $318,000 for the same
period in the prior year. This increase can be attributed primarily to an
increase in the net realized gains on sales of securities available for sale and
income from bank owned life insurance of $222,000 and $177,000, respectively.
Noninterest expense. Noninterest expense increased $319,000 or 12.0% to $3.0
million for the three months ended March 31, 1999, from $2.7 million for the
same period in the prior year. This increase was the result of increases in
compensation and employee benefits, premises and equipment, federal deposit
insurance premiums and other expenses of $139,000, $106,000, $7,000 and $83,000,
respectively, partially offset by a decrease in data processing costs of
$16,000. The increase in compensation and employee benefits is due primarily to
staffing increases between periods and normal salary and benefit increases. The
increase in premises and equipment and federal deposit insurance premimums were
the result of the opening of the Company's new Wexford branch office during the
quarter and an increase in the average balance of deposits for the three months
ended March 31, 1999. The increase in other operating expenses is primarily
attributable to a $43,000 write-off of fraudulently withdrawn deposits.
Provision for income taxes. The provision for income taxes decreased $283,000
or 56.0% to $222,000 for the three months ended March 31, 1999, from $505,000
for the same period in the prior year. This decrease was attributable to a
decrease in pre-tax net income and a reduction in the Company's effective tax
rate as a result of an increase in the average balance of tax exempt securities
between the periods.
10
<PAGE>
Average Balance Sheet and Yield/Rate Analysis. The following table sets forth,
for periods indicated, information concerning the total dollar amounts of
interest income from interest-earning assets and the resultant average yields,
the total dollar amounts of interest expense on interest-bearing liabilities and
the resultant average costs, net interest income, interest rate spread and the
net interest margin earned on average interest-earning assets. For purposes of
this table, average loan balances include non-accrual loans and exclude the
allowance for loan losses, and interest income includes accretion of net
deferred loan fees. Interest and yields on tax-exempt securities (tax-exempt
for federal income tax purposes) are shown on a fully tax equivalent basis.
Yields and rates have been calculated on an annualized basis utilizing monthly
interest amounts.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands) Three months ended March 31,
1999 1998
--------------------------------------- ---------------------------------------
Average Yield / Average Yield /
Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
- -----------------------
Taxable securities available for sale $ 385,756 $ 5,942 6.16% $ 376,426 $ 6,311 6.71%
Tax-exempt securities available for sale 100,843 2,016 8.00% 67,302 1,395 8.29%
Taxable securities held to maturity 52,843 740 5.60% 81,401 1,224 6.01%
Tax-exempt securities held to maturity 7,995 160 8.01% 8,368 185 8.84%
------------- ----------- --------- --------- -------- --------
547,437 8,858 6.47% 533,497 9,115 6.83%
------------- ----------- --------- --------- -------- --------
Mortgage loans 293,050 5,615 7.66% 284,737 5,610 7.88%
Other loans 70,147 1,340 7.64% 61,681 1,206 7.82%
------------- ----------- --------- --------- -------- --------
363,197 6,955 7.66% 346,418 6,816 7.87%
------------- ----------- --------- --------- -------- --------
Cash equivalents 8,387 63 3.00% 8,462 69 3.26%
FHLB stock 18,435 296 6.42% 18,053 289 6.40%
------------- ----------- --------- --------- -------- --------
26,822 359 5.35% 26,515 358 5.40%
------------- ----------- --------- --------- -------- --------
Total interest-earning assets 937,456 16,172 6.90% 906,430 16,289 7.19%
Other noninterest-earning assets 36,615 - - 17,367 - -
------------- ----------- --------- --------- -------- --------
Total assets $ 974,071 $ 16,172 6.64% $ 923,797 $ 16,289 7.05%
============= =========== ========= ========= ========= ========
Interest-bearing liabilities:
- ----------------------------
Interest-bearing demand deposits $ 157,602 $ 915 2.35% $ 150,633 $ 880 2.37%
Time deposits 259,510 3,482 5.44% 243,996 3,408 5.66%
------------- ----------- --------- --------- -------- --------
417,112 4,397 4.28% 394,629 4,288 4.41%
------------- ----------- --------- --------- -------- --------
FHLB advances 317,071 4,757 6.08% 338,315 5,338 6.40%
Reverse repo's & other borrowings 136,848 1,906 5.65% 83,883 1,180 5.71%
------------- ----------- --------- --------- -------- --------
453,919 6,663 5.95% 422,198 6,518 6.26%
------------- ----------- --------- --------- -------- --------
Preferred securities 24,033 558 9.42% 24,085 556 9.36%
------------- ----------- --------- --------- -------- --------
Total interest-bearing liabilities 895,064 11,618 5.26% 840,912 11,362 5.48%
Noninterest-bearing demand deposits 10,428 - - 8,573 - -
Other noninterest-bearing liabilities 6,109 - - 5,612 - -
------------- ----------- --------- --------- -------- --------
Total liabilities 911,601 11,618 5.17% 855,097 11,362 5.39%
Stockholders' equity 62,470 - - 68,700 - -
------------- ----------- --------- --------- -------- --------
Total liabilities and equity $ 974,071 $ 11,618 4.84% $ 923,797 $ 11,362 4.99%
============= =========== ========= ========= ========= ========
Net interest income $ 4,554 $ 4,927
============ =========
Interest rate spread (difference between 1.64% 1.71%
======== ========
weighted average rate on interest-earning
assets and interest-bearing liabilities)
Net interest margin (net interest 1.94% 2.17%
======== ========
income as a percentage of average
interest-earning assets)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Analysis of Changes in Net Interest Income. The following table analyzes the
changes in interest income and interest expense, between the quarters ended
March 31, 1999 and 1998, in terms of: (1) changes in volume of interest-earning
assets and interest-bearing liabilities and (2) changes in yields and rates.
The table reflects the extent to which changes in the Company's interest income
and interest expense are attributable to changes in rate (change in rate
multiplied by prior period volume), changes in volume (changes in volume
multiplied by prior period rate) and changes attributable to the combined impact
of volume/rate (change in rate multiplied by change in volume). The changes
attributable to the combined impact of volume/rate are allocated on a consistent
basis between the volume and rate variances. Changes in interest income on
securities reflects the changes in interest income on a fully tax equivalent
basis.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
(In thousands) 1999 versus 1998
Increase (decrease) due to
-----------------------------------------------
Volume Rate Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Securities $ 234 $ (491) $ (257)
Loans 324 (185) 139
Cash equivalents (1) (5) (6)
FHLB stock 6 1 7
---------- ----------- -----------
Total interest-earning assets 563 (680) (117)
---------- ----------- -----------
Interest expense:
Deposits 240 (131) 109
FHLB advances (326) (255) (581)
Reverse repurchases & other borrowings 738 (12) 726
Preferred securities (1) 3 2
---------- ----------- -----------
Total interest-bearing liabilities 651 (395) 256
---------- ----------- -----------
Net interest income $ (88) $ (285) $ (373)
========== =========== ===========
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
ASSET AND LIABILITY MANAGMENT
The primary objective of the Company's asset and liability management function
is to maximize the Company's net interest income while simultaneously
maintaining an acceptable level of interest rate risk given the Company's
operating environment, capital and liquidity requirements, performance
objectives and overall business focus. The principal determinant of the
exposure of the Company's earnings to interest rate risk is the timing
difference between the repricing or maturity of interest-earning assets and the
repricing or maturity of its interest-bearing liabilities. The Company's asset
and liability management policies have decreased interest rate sensitivity
primarily by shortening the maturities of interest-earning assets while at the
same time extending the maturities of interest-bearing liabilities. The Board
of Directors of the Company continues to believe in strong asset/liability
management in order to insulate the Company from material and prolonged
increases in interest rates. As a result of this policy, the Company emphasizes
a larger, more diversified portfolio of residential mortgage loans in the form
of mortgage-backed securities. Mortgage-backed securities generally increase
the quality of the Company's assets by virtue of the insurance or guarantees
that back them, are more liquid than individual mortgage loans and may be used
to collateralize borrowings or other obligations of the Company.
The Company's Board of Directors has established an Asset and Liability
Management Committee consisting of two outside directors, the President and
Chief Executive Officer, Senior Vice President and Chief Financial Officer,
Senior Vice President of Operations and the Senior Vice President of Lending of
the Company. This committee, which meets quarterly, generally monitors various
asset and liability management policies which were implemented by the Company
over the past few years. These strategies have included: (i) an emphasis on the
investment in adjustable-rate and shorter duration mortgage-backed securities
and (ii) an emphasis on the origination of single-family residential adjustable-
rate mortgages (ARMs), residential construction loans and commercial real estate
loans, which generally have adjustable or floating interest rates and/or shorter
maturities than traditional single-family residential loans, and consumer loans,
which generally have shorter terms and
12
<PAGE>
higher interest rates than mortgage loans and (iii) the purchase of off-balance
sheet interest rate caps which help to insulate the Bank's interest rate risk
position from increases in interest rates.
As of March 31, 1999, the implementation of these asset and liability
initiatives resulted in the following: (i) $168.9 million or 45.0% of the
Company's total loan portfolio had adjustable interest rates or maturities of 12
months or less; (ii) $108.7 million or 42.4% of the Company's portfolio of
single-family residential mortgage loans (including residential construction
loans) consisted of ARMs and (iii) $76.5 million or 19.8% of the Company's
portfolio of mortgage-backed securities (including mortgage-backed securities
available for sale) were secured by ARMs and (iv) the Company had $120.0 million
in notional amount of interest rate caps.
The implementation of the foregoing asset and liability initiatives and
strategies, combined with other external factors such as demand for the
Company's products and economic and interest rate environments in general, has
resulted in the Company being able to maintain a one-year interest rate
sensitivity gap ranging between a positive 5.0% of total assets to a negative
15.0% of total assets. The one-year interest rate sensitivity gap is defined as
the difference between the Company's interest-earning assets which are scheduled
to mature or reprice within one year and its interest-bearing liabilities which
are scheduled to mature or reprice within one year. At March 31, 1999, the
Company's interest-earning assets maturing or repricing within one year totaled
$386.7 million while the Company's interest-bearing liabilities maturing or
repricing within one-year totaled $418.5 million, providing a deficiency of
interest-earning assets over interest-bearing liabilities of $31.8 million or a
negative 3.2% of total assets. At March 31, 1999, the percentage of the
Company's assets to liabilities maturing or repricing within one year was 92.4%.
The Company does not presently anticipate that its one-year interest rate
sensitivity gap will fluctuate beyond a range of a positive 5.0% of total assets
to a negative 15.0% of total assets.
The one year interest rate sensitivity gap has been the most common industry
standard used to measure an institution's interest rate risk position. The
Company also utilizes income simulation modeling in measuring its interest rate
risk and managing its interest rate sensitivity. The Asset and Liability
Management Committee of the Company believes that simulation modeling enables
the Company to more accurately evaluate and manage the possible effects on net
interest income due to the exposure to changing market interest rates, the slope
of the yield curve and different prepayment and decay assumptions under various
interest rate scenarios. At March 31, 1999, the Company's simulation model
indicated that the Company's statement of financial condition is liability
sensitive. Within the past 28 months, the Company has purchased interest rate
cap contracts with notional amounts totaling $120.0 million in order to insulate
against a rising interest rate environment. As such, in a 300 basis point
gradually rising rate environment over 24 months, with minor changes in the
statement of condition and limited reinvestment changes, net interest income is
projected to decrease by approximately 1.0% over such 24 month period.
LIQUIDITY
The Bank is required by the Office of Thrift Supervision ("OTS") to maintain a
minimum level of liquidity to assure their ability to meet demands for
customer's withdrawals and the repayment of short term borrowings. The
liquidity requirement is calculated as a percentage of deposits and short-term
borrowings, as defined by the OTS, and currently must be maintained at amounts
not less than 4.0%. The Bank's liquidity ratio fluctuates depending primarily
upon deposit flows but has been consistently maintained at levels in excess of
the required percentage. At March 31, 1999, the Bank's liquidity ratio was
14.5%.
The Company's primary sources of funds generally have been deposits obtained
through the offices of the Bank, borrowings from the FHLB, reverse repurchase
agreement borrowings and amortization and prepayments of outstanding loans and
maturing investment securities. During the three months ended March 31, 1999,
the Company used its sources of funds primarily to purchase securities, and to a
lesser extent, the funding of loan commitments. As of such date, the Company had
outstanding loan commitments totaling $21.0 million, unused lines of credit
totaling $18.8 million and $9.9 million of undisbursed loans in process.
13
<PAGE>
At March 31, 1999, certificates of deposits amounted to $254.8 million or 60.2%
of the Company's total consolidated deposits, including $153.7 million which
were scheduled to mature by March 31, 2000. At the same date, the total amount
of FHLB advances which were scheduled to mature by March 31, 2000 was $73.1
million. Management of the Company believes that it has adequate resources to
fund all of its commitments, that all of its commitments will be funded by March
31, 2000 and that, based upon past experience and current pricing policies, it
can adjust the rates of savings certificates to retain a substantial portion of
its maturing certificates and also, to the extent deemed necessary, refinance
the maturing FHLB advances.
REGULATORY CAPITAL REQUIREMENTS
Current regulatory requirements specify that the Bank and similar institutions
must maintain tangible capital equal to 1.5% of adjusted total assets, core
capital equal to 4% of adjusted total assets and risk-based capital equal to 8%
of risk-weighted assets. The OTS may require higher core capital ratios if
warranted, and institutions are to maintain capital levels consistent with their
risk exposures. Both the FDIC and the OTS reserve the right to apply this
higher standard to any insured financial institution when considering an
institution's capital adequacy. At March 31, 1999, the Bank was in compliance
with all regulatory capital requirements with tangible, core and risk-based
capital ratios of 7.0%, 7.0% and 18.6%, respectively.
RECENT ACCOUNTING, REGULATORY AND OTHER MATTERS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires an entity
to recognize all derivatives as either assets or liabilities in the statement of
financial position and measure the instruments at their fair value. A
derivative may be designated as a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, a
hedge of the exposure to a variable cash flows of a forecasted transaction, or a
hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. This statement is
effective for fiscal years beginning June 15, 1999. The Company has not
determined the impact of the adoption of the standard at this time.
The Management Discussion and Analysis section of this Form 10-Q contains
certain forward-looking statements (as defined in the Private Securities
Litigation Reform Act of 1995). These forward-looking statements may involve
significant risks and uncertainties. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, actual
results may differ materially from the results in these forward-looking
statements.
YEAR 2000
The Year 2000 ("Y2K") issue exists because in the past many computer programs
were developed to recognize only the last two digits of a year (e.g. "99" for
"1999"). Without updating or replacing existing systems it is possible that
certain computer programs will recognize the year 2000 as 1900 because they will
key on the digits "00". The Company is aware of the issues associated with the
programming code in certain existing computer systems as the year 2000
approaches. The Y2K problem is pervasive and complex as many computer
operations may be affected in some way by the rollover of the two-digit year
value to 00. The issue is whether computer systems will properly recognize date
sensitive information when the year changes to 2000. Systems that do not
properly recognize such date could generate erroneous data or cause a system
failure.
The Securities and Exchange Commission ("SEC"), the Federal Financial
Institution's Examination Council ("FFIEC") and other federal banking regulators
have issued guidelines to assure that insured depository institutions
appropriately address Y2K issues, which primarily center on the ability of
computer systems to
14
<PAGE>
recognize the year 2000. The FFIEC has established that the Y2K management
process should consist of five phases (Awareness, Assessment, Renovation,
Validation and Implementation) and has established a timeline for the completion
of each phase.
The Company outsources substantially all of its data processing needs and it is
to a large extent dependent upon vendor cooperation for systems used in its day-
to-day business. The Company is working closely with its vendors to ensure that
Y2K issues will not adversely affect its operational and financial systems.
The Company has developed a Year 2000 Action Plan ("Plan") within the FFIEC
guidelines that addresses all systems, hardware and data processing applications
provided by third-party vendors and internal programs. The Awareness and
Assessment phases are completed and related to the understanding of the Y2K
problem, the establishment of a Y2K Steering Committee to oversee the overall
strategies and Plan, and identifying all hardware, software, networks,
processing platforms, vendor interdependencies and budget needs that are
affected by the Y2K date change. The Renovation phase entails assessing the
need for hardware and software upgrades, system replacements, and other
associated changes. The Company has completed the Renovation phase. The
Validation and Implementation phases entail determining the Y2K status of the
Company's mission-critical vendors through testing and certification. Testing
has been completed on a substantial number of these vendors and indications at
this time are that all of the Company's major vendors will be Year 2000
compliant. It is anticipated that the Validation and Implementation phases will
be completed by June 30, 1999. The Company is formulating contingency plans for
its major functions in the event the Company experiences system interruptions or
failures due to Y2K problems that are beyond the Company's control.
The Company has completed a conversion of its third party provided legacy
computer system to another third party provided client server, relational
database system. The decision to change third-party providers centered on
technology issues and was not based on year 2000 issues. The new system has
been tested and verified Year 2000 compliant.
Management has budgeted approximately $65,000 for the year 1999 to cover various
Year 2000 costs. The 1999 budget covers costs such as testing the Company's
largest third-party provider's data processing system, possible renovation of
other third-party provided systems, and customer awareness communications.
Direct and indirect costs associated with Year 2000 issues have not had a
significant impact on the Company's consolidated financial statements to date
and management does not anticipate that any such future costs will be of a
material nature. Success in achieving Year 2000 readiness depends on many
factors, some of which are outside the Company's control. Despite reasonable
efforts, the Company cannot assure that it will not experience any disruptions
or otherwise be adversely affected by Year 2000 problems. If renovations,
modifications and conversions are not completed on a timely basis where
required, the year 2000 problem could result in additional expenses or business
disruption that may have a material impact on the operations of the Company.
The above Year 2000 readiness disclosures are made for the sole purpose of
communicating or disclosing information aimed at correcting and/or avoiding Year
2000 failures. These statements are made with the intention to comply fully
with the Year 2000 Information and Readiness Disclosure Act as signed into law
October 19, 1998. All statements made herein shall be construed within the
confines of that Act.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
Quantitative and qualitative disclosures about market risk are presented at
December 31, 1998 in Item 7A of the Company's Annual Report on Form 10-K, filed
with the SEC on March 31, 1999. Management believes there have been no material
changes in the Company's market risk since December 31, 1998.
15
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- --------------------------
The Company and its subsidiaries are involved in various legal proceedings
occurring in the ordinary course of business. It is the opinion of management,
after consultation with legal counsel, that these matters will not materially
effect the Company's consolidated financial position or results of operations.
Item 2. Changes in Securities
- ------------------------------
None.
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Item 5. Other Information
- --------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit 27 Financial Data Schedule
(b) Form 8-K The Company filed a Form 8-K dated March 17, 1999 to report a
$0.09 per share quarterly cash dividend payable April 23, 1999 to
stockholders of record at the close of business on March 31, 1999.
16
<PAGE>
Signatures
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ESB FINANCIAL CORPORATION
Date: May 10, 1999 By: /s/ Charlotte A. Zuschlag
-------------------------------------
Charlotte A. Zuschlag
President and Chief Executive Officer
Date: May 10, 1999 By: /s/ Charles P. Evanoski
-------------------------------------
Charles P. Evanoski
Senior Vice President and
Chief Financial Officer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,591
<INT-BEARING-DEPOSITS> 5,313
<FED-FUNDS-SOLD> 2,470
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 495,955
<INVESTMENTS-CARRYING> 58,278
<INVESTMENTS-MARKET> 58,353
<LOANS> 359,891
<ALLOWANCE> 4,820
<TOTAL-ASSETS> 980,942
<DEPOSITS> 423,016
<SHORT-TERM> 147,095
<LIABILITIES-OTHER> 5,450
<LONG-TERM> 314,691
0
0
<COMMON> 63
<OTHER-SE> 63,263
<TOTAL-LIABILITIES-AND-EQUITY> 980,942
<INTEREST-LOAN> 6,955
<INTEREST-INVEST> 8,118
<INTEREST-OTHER> 358
<INTEREST-TOTAL> 15,431
<INTEREST-DEPOSIT> 4,397
<INTEREST-EXPENSE> 11,616
<INTEREST-INCOME-NET> 3,815
<LOAN-LOSSES> 3
<SECURITIES-GAINS> 215
<EXPENSE-OTHER> 522
<INCOME-PRETAX> 1,577
<INCOME-PRE-EXTRAORDINARY> 1,577
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,355
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.26
<YIELD-ACTUAL> 6.90
<LOANS-NON> 6,050
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,815
<CHARGE-OFFS> 2
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 4,820
<ALLOWANCE-DOMESTIC> 4,820
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
